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Evening Capsule: A look back at the financial markets for the day
Publish date: 19th August, 2019
Stock markets are known for their volatility. But it can also be quite an exciting roller-coaster ride. Some find it interesting and enthralling. Others find it worrisome.
Irrespective, if you're a stock market trader or investor, you need to keep yourself up-to-date with stock market developments.
Here’s a summary look at the stock market trends and developments today:
Nifty marginally higher at 11,054 (+6 points); Sensex higher at 37,402 (+52 points)
Sensex slipped more than 315 points intraday on Monday and the Nifty almost closed flat on a day of fluctuating fortunes in the stock markets. The markets had shown a buoyant start on the hope that the government would provide some clarity on the FPI tax surcharge and also announce a major reform boost for markets. With none forthcoming, markets gave up most of their gains.
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10-year bond yields trades higher at 6.580% at 4.55 pm on Monday
Bond yields were marginally higher at 6.58% compared to a close of 6.55% on Friday. Bond markets largely tracked the US bond markets where the benchmark 10 year yields were marginally higher at 1.61%. The yield spread is back again at 5% and that is showing up in the FPI buying into debt. The only concern for markets right now is the higher fiscal deficit which could pressure interest rates.
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The rupee trades weaker by 41 bps at Rs.71.445/$ at 4.55 pm on Monday
The weakness in the rupee continued and now it has lost more than 3.5% since the beginning of August as a trade slowdown and weak trade data has been putting pressure on the INR. Negative FPI flows into equities are also taking their toll on the markets. The Chinese Yuan continues to trade around the 7.05/$ mark and that is also keep the rupee under pressure since early August.
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Brent crude higher by 57 bps at $58.97/bbl at 4.55 PM on Monday
Brent price went up on Monday after the geopolitical risk continued to play havoc in the Middle East. Even as UK refused to hold the Iranian Vessel near the Strait of Gibraltar despite a special plea from the US, the situation soured with Yemen launching attacks on select targets in Saudi Arabia. Saudi has been accusing Iran of supporting the Houthi rebels in Yemen.
Related reads:
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Sectoral Viewpoint: IT, Pharma, Realty in the positive; autos, metals, PSU Banks in stress
It was a day of mixed fortunes with the trend clearly moving towards the declines on a day which ended at 20:30. There was a rush to safety as investors preferred to buy into defensive sectors like IT and pharma despite global concerns. Even private banks managed to trade in the positive even as PSU banks took deep cuts. Autos and metals continued to lag on slowdown concerns.
Related reads:
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News that markets reacted to
- Analysts have already started downgrading EPS estimates for the full year FY20 after the June quarter turned out worse than expected. Against the original expectation of 20% growth in profits that analysts began with, the earnings growth has now been toned down to just about 3-4%. Overall profit growth, excluding banks, is expected to be around 3.4% only.
- RBI may look to link some of the new loans to the policy rate announced by the central bank. In the last 6 months, the RBI has cut the rates by 110 basis points but the impact on the lending rates is not visible. Most banks cite the high cost of deposits as the reason. RBI governor was of the view that linking some loans to policy rate would force banks to pass on rate cuts.
- SEBI may look to ease the buyback norms for companies with NBFC and Housing Finance norms. It is not clear if this includes any change in the buyback tax policy. It may be recollected that in the Union Budget announced in July, the FM had announced a 20% tax on buybacks on the difference between the buyback price and the issue price. Details are awaited.
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By: Sandhya Kannan, Head – Content
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